Nintendo reports so-so results and forecasts mixed unit sales ahead

Nintendo reported that its nine-month results today were respectable, despite the negative impact of a sharply rising yen which makes dollar-based sales look weaker. The sales include the all-important holiday selling season, where Nintendo fared reasonably well but couldn’t beat last year’s numbers.

The report shows that Nintendo has to start raising its game as it faces new competition from Apple and Sony. The latter announced it has a new portable game system coming this fall to compete with Nintendo’s upcoming 3DS, which debuts in March. Nintendo is handily beating Sony in games, but Apple is coming in from left field, stealing gamers via the iPod Touch, iPad and iPhone.

The Japanese game company said it reported nine-month net sales of 807.9 billion yen, or $9.82 billion, down from 1,182 billion yen a year ago. Operating income was 158.7 billion yen, compared with 296.6 billion yen a year ago. Due to exchange rate losses of 84.4 billion yen, ordinary income was 80.4 billion yen and net income was 49.5 billion yen.

During the December 31 quarter, Nintendo said it saw strong sales of Pokemon Black Version, Pokemon White Version, Super Mario Galaxy 2 for the Wii, Wii Party, and Donkey Kong Country Returns. Sales were robust in the U.S. and Europe, but Nintendo admitted that overall Wii and DS hardware sales in the U.S. were not as strong as year-ago numbers.

Overall, Nintendo sold 15.7 million DS units in the past three quarters and 13.72 million Wii units. DS software sales were 98.99 million units and Wii software sales were 150.54 million units.

Nintendo did not change its earnings forecast for the fiscal year ending March 31, assuming an exchange rate of 85 yen to the dollar. But now that December results are in, the company expects Nintendo DS hardware sales to be 1 million units lower than the previous fiscal year forecast of 18.5 million units. Nintendo likewise lowered its forecast for sales of the Wii game console from 17.5 million units to 16 million units.

Nintendo also changed its software forecasts. It expects to sell 10 million more DS games than its previous estimate of 110 million units for the year; now it expects 120 million units. The unit forecast of Wii games is also expected to be higher by 32 million units, for a total of 170 million units sold for the fiscal year. Those are some huge increases in software sales, making up for weaker hardware sales. Nintendo also said it expects to sell 4 million 3DS units by March 31.

During the October through December period, Nintendo sold 17.75 million DS and Wii hardware units and 130 million games. Lifetime DS sales since 2004 are 144.59 million hardware units and 817.49 million software units. Wii sales are at 84.64 million hardware units and 695.37 million software units.